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SYNOPSIS
Page Industries Limited engages in
manufacturing, distributing, and
marketing garments under the
‘Jockey’ brand name in India, Sri
Lanka, Bangladesh, and Nepal.
Page Industries Ltd has declared
payment of 3rd Interim Dividend of
Rs. 10 per share on an equity share
value of Rs. 10 each.
Page Industries Ltd has started the
commercial production at its new
unit at Manganapalya, Bangalore on
March 12, 2012.
Page Industries Ltd has entered into
an exclusive licensing agreement
with Speedo International Ltd.
Net Sales and PAT of the company
are expected to grow at a CAGR of
34% and 41% over 2010 to 2013E
respectively.
Years Net sales EBITDA Net Profit EPS P/E
FY 11 4915.62 1028.39 585.48 52.49 49.91
FY 12E 6874.63 1570.44 924.61 82.90 31.61
FY 13E 8112.07 1857.39 1105.51 99.11 26.43
Stock Data:
Sector: Other Apparels
Face Value Rs. 10.00
52 wk. High/Low (Rs.) 3018.90/1390.00
Volume (2 wk. Avg.) 5350
BSE Code 532827
Market Cap (Rs.In mn) 29223.48
Share Holding Pattern
1 Year Comparative Graph
Page Industries BSE SENSEX
C.M.P: Rs. 2620.00 Target Price: Rs. 2960.00 Date: Mar 26th, 2012 BUY
Page Industries Ltd Result Update: Q3 FY 12
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Peer Group Comparison
Name of the company CMP(Rs.) Market
Cap.(Rs.Mn.) EPS(Rs.) P/E(x) P/Bv(x) Dividend (%)
Page Industries 2620.00 29223.48 52.49 49.91 23.61 260.00
Zodia Clothing 199.75 3849.20 3.87 51.61 2.41 50.00
Shrenuj & Co 69.50 5310.50 4.59 15.14 1.51 30.00
Rupa & Co 140.00 11133.40 4.66 30.04 6.82 100.00
Investment Highlights
Q3 FY12 Results Update
Page Industries Ltd disclosed a phenomenon rise in standalone net profit for the
quarter ended Dec 2011. During the quarter, the profit of the company surged
27.47% to Rs 199.14 million from Rs 156.22 million in the same quarter previous
year. Net sales for the quarter for the quarter rose 28.38% to Rs 1721.090 million
from Rs 1340.63 million, when compared with the prior year period. It reported
earnings of Rs 17.85 a share during the quarter, registering 27.47% increase over
previous year period.
Quarterly Results - Standalone (Rs in mn)
As At Dec-11 Dec -10 %change
Net sales 1721.09 1340.63 28.38
PAT 199.14 156.22 27.47
Basic EPS 17.85 14.01 27.47
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Commencement of new unit at Manganapalya
Page Industries Ltd has started the commercial production at its new unit at
Manganapalya, Bangalore on March 12, 2012.
Declaration of 3rd Interim Dividend
Page Industries Ltd has declared payment of 3rd Interim Dividend of Rs. 10 per
share on an equity share value of Rs. 10 each.
Company Profile
Page Industries was set up in 1994 with the key objective of bringing the world
renowned brand 'Jockey' to India. Its promoters, Genomal family, had then been
associated with Jockey International Inc. for 44 years as their sole licensee in the
Philippines. It became a public company in March 2007 and is quoted in the Bombay
Stock Exchange (BSE) and the National Stock Exchange (NSE) of India.
The company is located in Bangalore, India are the exclusive licensees of Jockey
International Inc. (USA) for manufacture and distribution of the Jockey brand
innerwear/ leisurewear for men and women in India, Sri Lanka, Bangladesh, and
Nepal and UAE.
In the early 1990s, when globalization was just unfolding in India, innerwear was a
low involvement category for consumers. There was no organized international
innerwear brand retailed in India. Page Industries Ltd identified this need and
introduced a wide range of quality products for men and women employing modern
global marketing and distribution methods.
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The company commenced operations in the year 1995 with the manufacturing,
distribution and marketing of Jockey products. As of the end 2011, the company
employs over 13,000 people with manufacturing operations spread over eight plants in
Bangalore totaling 7,35,000 square feet of space. It commands wide spread pan India
distribution encompassing over 18,000 retail outlets in 1,100 cities and towns and has
revolutionized the innerwear market by launching exclusive Jockey outlets across
India numbering 65 as of March 2011. In August 2008, Page Industries' promoter’s
Genomal family and Jockey International USA celebrated their golden anniversary of
association and both groups renewed their commitment to an even more exciting next
50 years.
In 2005 and 2009, the company was awarded the 'best licensee of the year' by Jockey
International Inc., as recognition for its outstanding achievement in establishing and
strengthening the Jockey brand as a market leader in India. Page Industries has
entered into the new licensing agreement with Jockey International Inc. up to
December 31, 2030. In 2010, the Company bagged the “International Licensee of the
Decade” award for achieving record growth year after year, offering world class
products and maintaining global quality standards across all operations.
Products of the company
• Men's Innerwear
• Women's Innerwear
• Sport and Leisure
• Thermals
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Financial Results
12 Months Ended Profit & Loss Account (Standalone)
Value(Rs.in.mn) FY10 FY11 FY12E FY13E
Description 12m 12m 12m 12m
Net Sales 3393.80 4915.62 6874.63 8112.07
Other Income 48.61 120.95 189.05 226.87
Total Income 3442.41 5036.57 7063.69 8338.93
Expenditure -2737.62 -4008.18 -5493.24 -6481.54
Operating Profit 704.79 1028.39 1570.44 1857.39
Interest -29.74 -52.26 -71.71 -84.62
Gross profit 675.05 976.13 1498.73 1772.77
Deprecation -89.87 -98.30 -111.60 -122.76
Profit Before Tax 585.18 877.83 1387.13 1650.01
Tax -189.07 -292.35 -462.52 -544.50
Profit After Tax 396.11 585.48 924.61 1105.51
Equity capital 111.54 111.54 111.54 111.54
Reserves 878.70 1126.20 2050.81 3156.32
Face value 10.00 10.00 10.00 10.00
EPS 35.51 52.49 82.90 99.11
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Quarterly Ended Profit & Loss Account (Standalone)
Value(Rs.in.mn) 30-Jun-11 30-Sep-11 31-Dec-11 31-Mar-12E
Description 3m 3m 3m 3m
Net sales 1764.16 1805.98 1721.09 1583.40
Other income 40.20 55.92 44.68 48.25
Total Income 1804.36 1861.90 1765.77 1631.66
Expenditure -1326.79 -1450.07 -1425.91 -1290.47
Operating profit 477.57 411.83 339.86 341.18
Interest -20.66 -11.28 -19.12 -20.65
Gross profit 456.91 400.55 320.74 320.53
Depreciation -23.38 -25.53 -30.14 -32.55
Profit Before Tax 433.53 375.02 290.60 287.98
Tax -156.64 -121.69 -91.46 -92.73
Profit After Tax 276.89 253.33 199.14 195.25
Equity capital 111.54 111.54 111.54 111.54
Face value 10.00 10.00 10.00 10.00
EPS 24.82 22.71 17.85 17.51
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Key Ratios
Particulars FY10 FY11 FY12E FY13E
No. of Shares(In Million) 11.15 11.15 11.15 11.154
EBITDA Margin (%) 20.77% 20.92% 22.84% 22.90%
PBT Margin (%) 17.24% 17.86% 20.18% 20.34%
PAT Margin (%) 11.67% 11.91% 13.45% 13.63%
P/E Ratio (x) 73.78 49.91 31.61 26.43
ROE (%) 40.00% 47.30% 42.76% 33.83%
ROCE (%) 51.67% 47.18% 49.91% 43.65%
Debt Equity Ratio 0.55 0.93 0.56 0.39
EV/EBITDA (x) 41.46 28.42 18.61 15.73
Book Value (Rs.) 88.78 110.97 193.86 292.98
P/BV 29.51 23.61 13.51 8.94
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Charts:
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Outlook and Conclusion
At the current market price of Rs.2620.00, the stock is trading at 31.61 x
FY12E and 26.43 x FY13E respectively.
Earning per share (EPS) of the company for the earnings for FY12E and FY13E
is seen at Rs.82.90 and Rs.99.11 respectively.
Net Sales and PAT of the company are expected to grow at a CAGR of 34% and
41% over 2010 to 2013E respectively.
On the basis of EV/EBITDA, the stock trades at 18.61 x for FY12E and 15.73 x
for FY13E.
Price to Book Value of the stock is expected to be at 13.51 x and 8.94 x
respectively for FY12E and FY13E.
We expect that the company will keep its growth story in the coming quarters
also. We recommend ‘BUY’ in this particular scrip with a target price of
Rs.2960.00 for Medium to Long term investment.
Industry Overview
The domestic innerwear industry is valued by industry sources at Rs. 140 billion,
accounting for 9% of the Indian apparel industry (valued at Rs. 1500 billion).Women’s
innerwear accounts for 66% of spend on innerwear (Rs. 90 billion) while men’s
innerwear accounts for 34% (Rs. 50 billion).The innerwear market is growing at a
faster rate than overall apparel market, and has been witnessing 16% revenue CAGR
over FY 06-10. The innerwear market can be divided into low, economy, middle,
premium and super – premium segments. The premium and super – premium
segments are branded markets characterized by faster growth. As per KSA Techno
Pack Report 2005 the men’s premium market is growing at the rate of 28% per annum
and super premium market is growing at the rate of 40% per annum. Similarly
women’s innerwear premium market is growing at the rate of 31% per annum and
super premium market is growing at over 40% per annum. The India consumption
growth story is expected to continue for some time. Rising disposable income, more
discerning and brand conscious consumers and growing awareness about personal
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hygiene is boosting growth of the premium innerwear market. Also enhancing the
growth is the rise in modern trade (malls, shopping complexes, etc).Government of
India has extended the Technology Upgradation Fund (TUF) for the eleventh five year
plan and has increased fund allocation. Government of India is also setting up various
apparel Parks, integrated textile parks and Special Economic Zones in partnership
with private sector.
Textile sector
The textiles industry in India enjoys a distinctive position due to the pivotal role it
plays by way of contribution to industrial output, employment generation (second
largest after agriculture) and export earnings of the country. The industry is rich and
varied, embracing the hand-spun and hand-woven sector at one end and the capital
intensive, sophisticated mill sector at the other. Its association with the ancient
culture and tradition of the country lends it a unique advantage in comparison with
textiles industry of other countries, thus giving it an uncommon edge to cater to a vast
variety of products and market segments both domestically, as well as, globally.
The industry currently contributes about 14 per cent to industrial production, 4 per
cent to GDP, and 17 per cent to the country’s export earnings, according to the
Annual Report 2010-11 of the Ministry of Textiles. The industry accounts for nearly 12
per cent share of the country's total exports basket. It provides direct employment to
more than 35 million people.
Industry sub-sectors
The textile industry comprises the following:
• Organised Cotton/Man-Made Fibre Textiles Mill Industry
• Man-Made Fibre / Filament Yarn Industry
• Wool and Woollen Textiles Industry
• Sericulture and Silk Textiles Industry
• Handlooms, Handicrafts, the Jute and Jute Textiles Industry
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• Textiles Exports
Production
During February 2011, total cloth production rose by 5.8 per cent year-on-year (y-o-y).
During April- February 2011 cloth production increased by 4.5 per cent y-o-y.
Export
Total textile exports during April-December 2010 registered an increase of 16.54 per
cent in rupee terms at Rs 87,582.83 crore as against Rs 75,149.98 crore during the
corresponding period of the previous year, according to the latest data released by
DGCI&S, Kolkata. The same were valued at US$ 19,217.12 million as against US$
15,695.07 million during the corresponding period of the previous year, registering an
increase of 22.44 per cent.
The share of textile exports in total exports was 11.29 per cent during April-December
2010 as against 12.34 per cent during April- December 2009.
The Road Ahead
India's T&C industry has great potential, and is one of the mainstays of the country’s
economy. The industry has enormous opportunities for domestic as well as
international investors given its consistent growth performance, abundant cheap
skilled manpower and growing domestic demand. With the abolition of quotas, India
has surged ahead of other countries and positioned itself as a value-added
manufacturer with a varied material base, an educated and English-speaking class of
executives with high product development and design orientation.
On the global front, India is set to become an even bigger participant, both as a
consumer and as a producer. The country offers an attractive combination of a large
domestic market, and a base for low cost production. The industry has gained a strong
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position in cotton based products, especially in the readymade garments and home
furnishings segment, which are expected to be the key drivers of growth for the
industry.
Besides this, the T&C industry is contributing towards promoting inclusive growth. It
has been contributing to broad based socio-economic development by providing
employment opportunities at local level.
The government envisions building state-of-the-art production capacities and
achieving a preeminent global standing in the textile sector by 2020, which includes
manufacture and export of all types of textiles.
________________ ____ _________________________ Disclaimer:
This document prepared by our research analysts does not constitute an offer or solicitation
for the purchase or sale of any financial instrument or as an official confirmation of any
transaction. The information contained herein is from publicly available data or other
sources believed to be reliable but do not represent that it is accurate or complete and it
should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of it’s
affiliates shall not be in any way responsible for any loss or damage that may arise to any
person from any inadvertent error in the information contained in this report. This document
is provide for assistance only and is not intended to be and must not alone be taken as the
basis for an investment decision.
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Firstcall India Equity Research: Email – [email protected]
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